ADJUDICATOR, ADVOCATE, OR SOMETHING IN BETWEEN?

Coming to terms with the role of the party-appointed arbitrator+

Sundaresh Menon

I. Secret conversations and illegal wiretaps

1. On 4 November 2009, the Republic of Croatia and the Republic

of Slovenia concluded a treaty to submit disagreements over their

land and maritime boundaries to arbitration.1 It was a hard-won

diplomatic victory not just for the two States, but also for the European

Union, under whose stewardship the treaty had been concluded. For

many, this marked the close of the chapter covering the tumultuous

period following the breakup of the former Yugoslavia, and it heralded

a new era of diplomatic cooperation.

2. A panel of five arbitrators was convened. In the usual way,

Slovenia and Croatia each appointed one of its nationals to the

+ A version of this paper was first presented in Singapore as the 2016 Herbert Smith Freehills – Singapore Management University Asian Arbitration Lecture on 24 November 2016. It was also presented in Kuala Lumpur on 25 November 2016 as the keynote address of the Chartered Institute of Arbitrators (Malaysia Branch) Inaugural Presidential Lecture.

* Chief Justice, Singapore. Assistant Registrar Shaun Pereira and my law clerk,

Scott Tan, worked closely with me in the research and preparation of this Lecture. In

the latter stages, my law clerk, Norine Tan, also assisted with some research and in

reviewing and editing the draft. We also discussed the ideas contained here. I am

deeply grateful to them for their great assistance.

2

tribunal. Croatia nominated Professor Budislav Vukas and Slovenia

nominated Dr Jernej Sekolec. They were joined by three others: two

judges of the International Court of Justice and a distinguished

Queen’s Counsel, who used to hold the Chichele Professorship of

International Law at Oxford University.2 The hearings began in 2012,

and on 10 July 2015, the tribunal announced that it expected to deliver

its award by the middle of December 2015.3 Everything seemed rosy.

But then it all went wrong.

3. On 22 July 2015, a Croatian daily newspaper published

transcripts and audio recordings of conversations between the

Slovenian arbitrator, Dr Sekolec, and the agent for Slovenia, Ms

Simona Drenik. Their conversations had been tapped, most probably

by Croatian intelligence. This fact, shocking enough on its own, was

eclipsed by the revelations which followed. It transpired that

Dr Sekolec had, in his conversations with Ms Drenik, divulged

contents of the tribunal’s private deliberations, including the fact that

the tribunal intended to award Slovenia at least two-thirds of the

disputed waters. The two discussed how best the other arbitrators

could be persuaded to rule in Slovenia’s favour on the remaining

issues. At one point, it appears that Dr Sekolec even proposed to

present to his fellow arbitrators the matters raised by Ms Drenik as if

these were his own “notes” on the case.4

3

4. Everything quickly unravelled. The day after the story broke,

both Dr Sekolec and Ms Drenik resigned their respective positions as

arbitrator and agent. This was followed swiftly by the resignation of

Professor Vukas, the Croatian-appointed arbitrator, and Croatia itself

soon withdrew from the arbitration. In June this year, an almost

entirely re-constituted tribunal issued a partial award, in which it

concluded that it has the jurisdiction to proceed with the matter, and

held that the arbitration should continue.5 Despite this, Croatia

steadfastly refuses to participate.6 It now appears that the arbitration

is, for all intents and purposes, at an end. What was to have been a

moment of triumph for European diplomacy has instead emerged as

a symbol of the failure of inter-State arbitration.

5. Fortunately, reported incidents like that which took place

between Croatia and Slovenia are not common. But the history of

international arbitration, and that of inter-State arbitration in particular,

does feature examples of shocking allegations of bias and impropriety

arising out of the conduct of party-appointed arbitrators. One might

think of the Alaskan Boundaries arbitration in 1907;7 the Buraimi

Oasis arbitration in the 1950s;8 the Iran-United States Claims Tribunal

in the 1980s;9 and the Loewen arbitration in 2004.10

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6. Against that background, it is perhaps unsurprising that some

influential voices have spoken out strongly against the institution of

the party-appointed arbitrator. The late Professor Hans Smit believed

that the problems of misaligned incentives and the predisposition

towards bias were endemic.11 He argued that the only solution was

the complete abolition of the practice of having party-appointed

arbitrators. In a similar vein, Professor Jan Paulsson has said that

there can be no justification for tolerating the moral hazards

associated with party-appointed arbitrators.12 He, too, proposes

abandoning the present system of party appointments in favour of

appointments by neutral arbitral institutions. In 2009, Professor Albert

Jan van den Berg analysed the 34 International Centre for Settlement

of Investment Disputes (“ICSID”) cases in which a dissent had been

issued, and found that in almost all those cases the dissents had been

issued by the arbitrator appointed by the losing party, causing him to

doubt the neutrality of such appointees. He concluded that the “root

of the problem is the appointment method”, arguing that a system of

unilateral appointments “may create arbitrators who may be

dependent in some way on the parties that appointed them”.13

7. To be sure, there are risk factors in the system of party

appointments—potential bias and conflicts of interest among them—

and we must not be blind to this. Indeed, I suggest that with the

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explosive growth of arbitration in recent decades and the sharp rise

in both the number and diversity of persons professing to stand

among the ranks of arbitrators, there has never been a more pressing

need for a clear and shared understanding of the proper role of the

party-appointed arbitrator.

8. In this lecture, I therefore propose to take a closer look at this

subject. I will begin with a brief discussion of the history of party-

appointed arbitrators before turning to the challenges posed to this

institution by the growth of arbitration accompanying the expansion of

global trade. I then offer my own views on the justifications for the

retention of the institution and the proper position that the party-

appointed arbitrator should occupy. Finally, I discuss some practical

rules of engagement and best practices that may be adopted to

minimise the risks that are often associated with the system of party

appointments. I will close by discussing a forthcoming proposal by the

Chartered Institute of Arbitrators (“CIArb”) which envisages the

creation of a centralised disciplinary service to handle complaints of

arbitrator misconduct.

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II. From Greece to Geneva: the history of the party-appointed

arbitrator

9. I begin with the history of party appointments. The institution of

the party-appointed arbitrator is of ancient vintage. Its precise origin—

like that of arbitration itself—is lost in antiquity.

10. Speeches written by orators in the Classical and Hellenistic

periods of ancient Greece make references to party-appointed

arbitrators.14 These speeches are striking because party-appointed

arbitrators were consistently referred to as “friends”.15 This was not

just a linguistic affectation because the arbitrators were often family

members or personal supporters of the parties. Even the common

arbitrator, who was jointly appointed by both parties, was referred to

as “koinos”, which may be translated as “friend not only of one side,

but of both sides”.16

11. Derek Roebuck, the great scholar of the history of arbitration,

explains that the object of arbitration was quite different then. In

ancient Greece, the first goal of an arbitrator was not adjudication, but

compromise. Arbitrators would try their best to steer the parties

towards a mediated settlement. It was only if a compromise could not

be reached that the arbitrators would then deliver a decision based

on what they thought was just.17 In that context, partisanship could be

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a virtue, rather than a vice, in as much as it might facilitate

compromise.

12. In the Renaissance, the practice appears to have been for each

party to appoint an equal number of arbitrators, with a final member

appointed by both only in the event of a tie. One example is a treaty

concluded in 1606 between James I of England and Henry IV of

France, which led to the establishment of two tribunals for resolving

trade disputes (one in London and the other in Rouen), each with an

equal number of party-appointed arbitrators.18 The careful symmetry

in both the location and composition of the tribunals reflects a

scrupulous attempt to respect the equality of the two sovereigns, and

to create a delicate balance of power that incentivised both

sovereigns to behave fairly.

13. From the Renaissance, we can move quickly to the 19th-

century Alabama Claims arbitration between America and Great

Britain, which arose out of events that occurred during the American

Civil War.

14. The British Government had declared its neutrality in the war,

but a lacuna in the relevant British statute permitted persons to

commission the building of warships in England, so long as they were

retrofitted with armaments outside the jurisdiction of the British

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courts.19 And this was precisely how the Confederate agents procured

English warships for use in the American Civil War. The most famous

of these ships was the eponymous CSS Alabama. In the two years

she sailed, the Alabama sank no less than 64 American vessels and

was alleged to have caused millions in direct losses. Needless to say,

this caused considerable resentment, and it threatened to precipitate

a trans-Atlantic falling-out between Great Britain and the United

States.20

15. Shortly after the sinking of the Alabama in 1864, the possibility

of arbitration was broached to determine the compensation Great

Britain should pay the United States for the destruction the Alabama

had wrought. After years of negotiations, the Treaty of Washington

was eventually concluded in 1871. Under it, both states agreed to

submit the question of compensation for resolution by a tribunal.

Although the Treaty was unusual in many respects,21 the issue of the

tribunal’s composition was dealt with in a somewhat modern way. The

parties each appointed one arbitrator and these two arbitrators were

joined by three others—a Brazilian, a Swiss, and an Italian—who

were appointed by the Emperor of Brazil, the President of the Swiss

Confederation and the King of Italy, respectively. The parties

preserved some influence through the appointment of a national, but

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this was moderated significantly by the presence of a greater number

of non-nationals.22

16. The Treaty of Washington is widely-recognised as the “basic

model for international arbitration today”.23 When President Theodore

Roosevelt negotiated the Hague Conventions of 1899 and 1907, he

was inspired by the memory of the Alabama Claims arbitration.24 As

a consequence, the First Hague Convention, which established the

Permanent Court of Arbitration, enshrined the system of party-

appointment.25 The World Courts followed suit. To this day, a party

before the International Court of Justice is permitted to appoint an ad

hoc judge to the Court if no national of that State is already a

permanent member of the court.26 In 1927, the International Chamber

of Commerce (“ICC”) Rules were revised to provide for a system of

party appointments with the stated aim of giving parties “greater

freedom of action” in regard to the arbitral process.27 And in ICSID

arbitrations, the default configuration is for there to be a panel of three:

two party-appointed arbitrators sitting with a presiding arbitrator who

would be jointly appointed by the two appointees.28 The system of

party appointments has also become an entrenched part of

international commercial arbitration between private parties. Party-

appointment provisions are ubiquitous and they may be found in the

United Nations Commission on International Trade Law

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(“UNCITRAL”) Model Law29 and Rules,30 the ICC Rules,31 as well as

the arbitration laws of multiple jurisdictions.32

17. This brief historical survey reveals that the institution of the

party-appointed arbitrator is not new. Rather, it has deep roots in the

history of arbitration. One scholar has referred to it as the “historical

keystone” of international arbitration, arguing that party appointments

were used as a tool to overcome the distrust between disputants from

diverse cultures.33 Without the comfort of being able to appoint an

arbitrator of one’s choosing, it was said that the parties could not be

brought to the table.34

18. But history also shows that the institution has not been static.

It has evolved to meet the contingencies of the day. In the Greek city

states, the party-appointed arbitrator reflected the imperative of

settlement. In the Renaissance, he embodied the mutual respect

between powerful sovereigns. In the Alabama Claims arbitration, the

party-appointed arbitrators were part-statesmen, part-jurists, and

part-negotiators.

III. The party-appointed arbitrator presently situated

19. However, arbitration plays a vastly different role in the

international landscape today. No longer is it a communal affair as in

11

the Greek city states; nor are party appointments reserved for a

tightly-drawn group of elites, as was the case in the Alabama Claims

arbitration.35 I suggest that the confluence of three modern

developments has placed the institution under increasing strain.

Dramatic growth in number and diversity of arbitration

practitioners

20. The first is the dramatic growth in the number and diversity of

arbitration practitioners. When arbitration was in its nascence,

practitioners saw themselves as a small and select group who upheld

a code of unwritten rules shaped by common values.36 Trust was the

currency of practice and there was little need for written guidance or

curial supervision. Challenges to arbitrators were few and far

between; in fact, it was so rare that arbitrator misconduct was omitted

as a ground for challenge from the 1927 Geneva Convention on the

Execution of Foreign Arbitral Awards, the predecessor to the 1958

New York Convention.

21. But in the past two decades, the arbitration industry has grown

in tandem with the surge in global trade and investment flows. As

traditional court structures strained to grapple with the complexities

thrown up by cross-border commerce, international arbitration

emerged to fill that gap by promising a neutral mode of dispute

12

resolution that could function well across geographical and cultural

borders. Its growth was boosted, in large part, by the New York

Convention, which gave arbitral awards unprecedented reach. New

arbitral institutions were rapidly set up and many jurisdictions

liberalised admissions criteria for foreign counsel appearing in

international arbitrations within their borders. All of this has seen a

tremendous increase in the number and diversity of new entrants to

the global arbitration community.37

22. These new entrants hail from myriad legal traditions and bring

with them their own conceptions of what constitutes ethically

acceptable conduct. To give an oft-cited example:38 in Germany,

speaking to a witness before he takes the stand to give evidence may

be a ground for professional censure; in America, by contrast, a

lawyer who fails to prepare a witness might be thought to have

breached his ethical duty to advance his client’s best case. The short

point is that arbitrators can no longer be said to be meaningfully

guided by implied understandings, shared values, or unspoken

conventions, because, amidst all this diversity, there is no such thing.

23. This can give rise to particular problems in relation to party-

appointed arbitrators. I illustrate this by reference to a 2013 study that

was published in the Journal of International Arbitration which shows

13

a marked divergence in the practice and expectations of lawyers in

Sweden and the United States in relation to ex parte pre-appointment

communications between arbitrators and counsel.39 All of the

American lawyers surveyed said they had experienced ex parte

interviews with potential party-appointed arbitrators, as against only

42% of Swedish lawyers who had; and 36% of the American lawyers

surveyed expressed the view that such interviews were always

appropriate, while only 4% of Swedish lawyers thought it to be so.

The lack of a common understanding as to what constitutes

acceptable conduct is not only a reality today, but is potentially a

problem that can, in some instances, cause difficulties in the conduct

of international arbitration.

The rise of the professional arbitrator

24. The second development is the rise of a class of arbitrators

whose livelihood depends predominantly, if not exclusively, on the

receipt of appointments to serve as arbitrator. They are like the

itinerant circuit judges of old, save that their jurisdiction is voluntary

and, more importantly, their services are remunerated on the basis of

demand.

25. An inevitable tension can develop in these circumstances

between the arbitrator’s personal interests and his professional

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duties. Arbitrators earn substantial fees in the cases over which they

preside. There is therefore a financial incentive to promote one’s

attractiveness as a prospective appointee which could, in the eyes of

the appointing party, turn on the likely outcome of the cases for which

they are appointed.40 This sits uncomfortably with the notion that

adjudicators should have no interest—much less a pecuniary one—

in the outcome of the cases they decide.41

26. This tension is illustrated by Cofely v Bingham,42 a decision of

the English High Court handed down this year. A trend of repeat

appointments by a party, coupled with evidence of partisan behaviour

during the hearings, led Mr Justice Hamblen to conclude that

apparent bias on the part of the arbitrator had been established. An

important factor in the court’s decision was the fact that the appointing

party maintained a “blacklist” of arbitrators, which presumably

comprised arbitrators who, in that party’s estimation, were unlikely to

render a verdict favourable to it. Mr Justice Hamblen said that the

notion that an appointee could fall out of favour with the appointing

party depending on the anticipated outcome of the case at hand

would be a matter of some import for any person whose income

depended on appointments.43

15

27. Critics have been especially scathing where investment treaty

arbitration is concerned. Appointments are said to be restricted to a

closed group of select individuals. There have also been assertions

of a pro-investor bias because it is said to be in the interest of the

entrepreneurial arbitrator to rule expansively on his own jurisdiction

and then in favour of the investor on the merits.44 The argument is

that by doing so, the arbitrator both incentivises the bringing of future

claims and increases the likelihood that a putative tribunal will have

the competence to hear those claims, thereby generating business.

International convergence on impartiality and independence

28. Straining against these two developments—the growth in the

number and diversity of arbitration practitioners and the challenges

posed by the rise of the professional arbitrator—is a third strand: this

is the modern consensus that the duties of impartiality and

independence apply equally to all members of the tribunal, whether

appointed by a party or not. Arbitration is, at its core, a quasi-judicial

proceeding and it must operate within certain limits of integrity and

fairness.45 In the words of the Canadian Supreme Court:46

From its inception arbitration has been held to be of the nature

of judicial determination and to entail incidents appropriate to

that fact. The arbitrators are to exercise their function not as

advocates of the parties nominating them, and a fortiori of one

party when they are agreed upon by all, but with free

independent and impartial minds as the circumstances permit.

16

Today, virtually every set of arbitration rules, national laws, and every

code of ethics that has been promulgated in relation to international

arbitration enshrines this principle.47

29. Yet, not so long ago, some were of the view that party-

appointed arbitrators could not be held to the same standards of

independence and impartiality as those that applied to non-party

appointed arbitrators. The most prominent proponents of this idea

were the Americans. The 1977 Code of Ethics for Arbitrators in

Commercial Disputes jointly prepared by the American Arbitration

Association (“AAA”) and American Bar Association (collectively, the

“AAA-ABA”) went so far as to provide that party-appointed arbitrators,

who were referred to as “non-neutrals”, “may be predisposed toward

the party who appointed them” and enjoyed many exemptions from

general standards of arbitrator conduct.48

30. However, the AAA-ABA eventually walked this back. The 2004

version of the Code states that it is “preferable for all arbitrators—

including any party-appointed arbitrators—to be neutral … and to

comply with the same ethical standards”. Thus, while the AAA-ABA

still retains a separate set of rules for party-appointed arbitrators,

these rules expressly state that they ought only to apply to domestic

arbitrations within the United States and only if the parties are agreed

17

on this. Several other notable changes were also made. For example,

while the 1977 Code permitted party-appointed arbitrators to engage

in unilateral communications with their appointing party,49 the 2004

Code subjects all arbitrators, whether party-appointed or not, to the

same restrictions on unilateral communication.50

31. But the fact that there is, in broad terms at least, a consensus

that the party-appointed arbitrator is subject equally to the duties of

impartiality and independence is not the end of the matter. There

remain grey areas where it is unclear whether the observance of

these duties can be reconciled with the way in which some parties

and their appointees conduct themselves. I refer, for the purposes of

this lecture, to the broad subject of ex parte communications between

a party and its appointee, both before and after the appointment. But

I also think that the tensions that afflict this subject must be

considered against the backdrop of the first two trends I have

identified, namely, the emergence of many practitioners of diverse

backgrounds and the challenges of maintaining a business in offering

arbitral services. I would further add that even as we work towards

resolving these issues, we must first ensure there is clarity in our

understanding of the role of the party-appointed arbitrator so that we

minimise the possibility of arbitral misadventure and strengthen the

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legitimacy of arbitration as an integral part of the dispute resolution

framework for this 21st century world.

IV. Justifications for the party-appointed arbitrator

32. Against the backdrop of those three trends and the related

observations, the question, for present purposes, is whether the

expectations of independence and impartiality imposed by the

modern consensus, coupled with the inescapable realities of

arbitration practice today, have conspired to reduce the institution of

the party-appointed arbitrator to an anachronism that we have grown

accustomed to but perhaps no longer understand the need for.

33. Professor Paulsson, perhaps the most trenchant critic of the

institution of the party-appointed arbitrator today, thinks so. He argues

that once a dispute has arisen, every step taken by the parties—

especially the appointment of arbitrators—will be tactical. This, when

coupled with the financial incentives which create the desire for re-

appointment, means that the party-appointed arbitrator will often be

placed in an impossible position in terms of discharging his duties of

independence and impartiality. He concludes thus: “The original

concept that legitimates arbitration is that of an arbitrator in whom

both parties have confidence. Why would any party have confidence

in an arbitrator selected by its unloved opponent?”51

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34. Two points are frequently made in answer to this. The first is a

positive case for the system of party appointments, and the second is

a mitigation of its flaws.

Confidence in the process

35. The positive case is that party appointments give the parties

confidence in the dispute resolution process. In the words of the late

Professor Andreas Lowenfeld, this confidence is founded on the fact

that at least one amongst the tribunal “will listen carefully … to the

presentation … study the documents with care,”52 and will appreciate

the legal and commercial culture, as well as the procedural

expectations of the appointing party. It is said that because of this,

parties will be more invested in the process and will therefore be more

likely to accept the result and comply with it.53

36. I have no doubt that the selection of a tribunal is a task that

must be undertaken with care, and that the tribunal should have the

expertise necessary for the adjudication of the dispute placed before

it. But what this calls for are persons with a particular expertise. It has

nothing whatsoever to do with them being appointed by the disputing

parties. The exercise of selection with an eye to expertise and

competence can just as easily be undertaken, as Professor Paulsson

suggests, by a neutral institution.

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37. My deeper concern with this argument is that it presents a

profoundly unattractive picture of arbitration. Have our expectations

really sunk so low that we derive confidence and satisfaction in the

process because we think one of the three adjudicators will attend to

our case carefully and give it the attention it is due? After all, the

implicit suggestion is that one can have no confidence in the

attentiveness, neutrality and impartiality of anyone on the tribunal

apart from one’s own appointee, ironic as that may sound. I do not

understand this because it runs counter to the most basic expectation

of neutrality and impartiality that is surely fundamental to the arbitral

process.

38. The short point is this. All arbitrators have a duty to study all

the material, and not only those presented by their appointing parties.

All arbitrators have a responsibility to give their utmost attention to the

cases presented by both parties. After all, the task of adjudication is

in many respects a comparative exercise. In my view, all arbitrators

must owe the same duties to all parties. Confidence in arbitration

must be anchored in the belief that it is a procedurally fair and

substantively neutral process for the resolution of disputes. Any other

view would be greatly corrosive of confidence in the institution of

arbitration. For this reason, I do not think we should do anything that

would encourage the belief that the party appointee has a special duty

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to apply particular care to the arguments, evidence, understandings

and expectations of his appointer.

Incentivising good behaviour

39. I turn to the argument presented in mitigation. Some

commentators acknowledge the structural problems with the present

system of party appointments, but argue that these problems are

mitigated by the fact that impartial and independent arbitrators are

often the most sought after. In short, the market will correct itself.

40. Thus, it has been said that an overzealous party-appointee is

prone to antagonise the other members of the tribunal and cause

them to shut out his views in their entirety for being tainted.54 On this

basis, it is argued that arbitrators achieve success not by being

partisan, but by developing a reputation for being honest,

independent and impartial;55 and conversely, that parties have an

incentive to appoint arbitrators who have a reputation for being even-

handed and fair, rather than one who will be partisan.56 On this view,

the financial incentives promote, rather than discourage, impartiality

and independence. Proponents often point to a 2010 survey

conducted by the Queen Mary University of London and White &

Case LLP in which 66% of corporate counsel surveyed were reported

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as having listed “open-mindedness and fairness” as the most

important factor in the selection of an arbitrator.57

41. But in my view, the force of this analysis is limited because the

real problem has never been with the unsophisticated and rankly

partisan arbitrator. One quickly gets a sense when a fellow arbitrator

is so nakedly biased that his views lose all credibility. The fear, rather,

is with those who shape the outcome of the arbitration in favour of

their appointing parties in more subtle ways. Power can be exercised

in many and varied ways, and it is often most effective when

channelled through the capillaries of influence.

42. The interference may be as innocuous as deliberate reticence

during the tribunal’s private deliberations; it may be as subtle as a hint

made in a casual remark in the corridor on the way to the deliberation

room; or it may take the form of a pointed or well-placed question that

derails an important line of questioning pursued by the other party’s

counsel in cross-examination. None of these might alone amount to

much. Collectively, they can change the outcome of the arbitration in

a manner which is improper. The real question is whether an implicit

expectation that one must pay special attention to the case of one’s

appointer, coupled with the financial incentives of appointment, can

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consciously, or more dangerously, sub-consciously, motivate this sort

of conduct.

My views on the party-appointed arbitrator

43. What the foregoing shows us, I think, is that the present system

of party appointments is one which carries some considerable risks.

The question then becomes: why should it continue to exist?

44. In answer, some have argued that unilateral appointment is a

“right”. As early as the 1907 Hague Conference, one of the

participants remarked that “the right of choosing one’s own judges [is]

a right which is of the very essence of arbitral justice.”58 Those who

hold this view contend that the “the right to name an arbitrator has

existed for decades, even centuries”59 and should be considered one

of the “fundamental elements” of international arbitration and that any

abrogation of this right will constitute an “assault on the very institution

of international arbitration”.60 I am not convinced that this argument

works. There is no question that the current system of party

appointments is one which is historically entrenched. However, it

does not follow as a matter of logical necessity that just because

disputants have been appointing arbitrators from time immemorial, it

ought therefore always to be so. Indeed it seems to me that party-

appointed arbitrators are at best a contingent, rather than a

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necessary, part of the institution of arbitration. If indeed the

operational landscape as we see it today is such that the perverse

incentives are too great to bear or to be tolerated, then a legitimate

question can be raised as to whether the practice ought to be

discarded.

45. I suggest that the most plausible answer to this is that unilateral

appointment is an expression of the principle of party autonomy, and

that principle is the cornerstone of arbitration.61 Party autonomy finds

its expression in the parties’ voluntary submission and participation in

arbitration in a form and manner of their choosing, which extends also

to the manner of appointing and constituting the tribunal. But to the

extent we now regard the system of unilateral appointments as an

integral feature of arbitration, I see it as something that has come

about by dint of long usage rather than as a feature that is rooted in

sound principle.

46. In the final analysis, the present system of party appointments

that we have, may be seen as a cultural phenomenon that arbitration

users have come to accept, but I am not sure it has any inherent value

or significance apart from its long use and history. That said, it is

precisely because the system of party appointments has such a long

lineage and is so firmly rooted in the practice of arbitration, that I do

25

not anticipate its abolition. I think the majority of users understand that

there are problems with the process and many will try to use this to

their benefit and tell themselves, rightly or wrongly, that the other side

is also doing the same; but on the whole, they are not ready to give

up the ability to influence, at least in part, the composition of the

tribunal that will determine their dispute.

47. The challenge for us is to think about how best to

accommodate this reality against the backdrop of the growing

diversity of arbitration users and the modern commercial pressures

that the arbitrator of today faces. This is important so that we preserve

the integrity and efficacy of the arbitration process at two levels.

(a) First, at the immediate level of meeting the procedural

and substantive expectations of fairness that each party to an

arbitration is entitled to hold of the process. The trouble in this

context is that, with the plurality of arbitration users today,

these sort of mismatched expectations can arise not because

of any malevolent intent, but even just as a consequence of

cultural differences in terms of the way in which legal practice

or adjudication is conducted in that party’s society.

(b) Second, at the broader level of keeping confidence in

the institution of arbitration. The practice of party appointments

26

is now so widespread and established that unless we create a

framework that effectively manages the risk factors inherent in

the practice of party appointments, confidence in the institution

of arbitration itself may suffer a harmful blow.

48. This problem is a delicate and complex one, and it has to

receive holistic treatment. At a granular level, it is important to first

establish a widespread consensus on the appropriate role of the

party-appointed arbitrator, and second, to lay down clear guidelines

and rules of engagement concerning problem areas such as

communications with party-appointed arbitrators and conflicts of

interest affecting them. I will shortly suggest some steps to this end

which are both prophylactic and self-regulatory. These measures, if

applied, would help by articulating clear standards and rules that

international practitioners can be expected to abide by. But at a

broader level, I think that there is also room for the introduction of a

regulatory framework with some bite, to ensure that practitioners who

do not keep within these bounds of fair-play and fair-dealing will be

taken to task.

49. It is to these matters that I now turn.

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V. Articulating a clear role for the party-appointed arbitrator

50. The first step is to understand the proper role of the party-

appointed arbitrator. It may be helpful to begin with the modern

consensus that all arbitrators have a duty to be independent and

impartial. This standard rules out partisanship or non-neutrality. But

many think that an arbitrator can preserve his independence and

impartiality and yet still maintain some special role in relation to his

appointing party. The question is whether this is even possible.

51. Nigel Blackaby and Constantine Partasides—the current

editors of Redfern and Hunter—argue that party-appointed arbitrators

have the additional duty of ensuring that “the arbitral tribunal properly

understands the case of the[ir] appointing party” and that “a party-

nominated arbitrator can fulfil a useful role in ensuring due process

for the party that nominated him or her, without stepping outside the

bounds of independence and impartiality”.62 Other giants of arbitration

scholarship—Doak Bishop and Lucy Reed,63 A A de Fina,64 Jacques

Werner,65 Catherine Rogers,66 and Andreas Lowenfeld,67 among

them, have suggested some variants of this view.

52. To the extent it is suggested that a party might have good and

legitimate reasons for retaining the right to choose its arbitrator, I have

no difficulty with that, as long as some of the risks that inhere in the

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process can be satisfactorily addressed and managed. But to the

extent it is suggested that a party-appointed arbitrator should see

himself as having a special duty to one of the parties, I remain

fundamentally uncomfortable with such a view. It seems to rest on the

untenable and, as I earlier expressed, dangerous assumption that

arbitrators can or should devote special attention or care to the case

of any one party, merely by dint of affiliation. The line between driving

a lively discussion to ensure that a party’s case is fully understood

and urging that party’s position upon the tribunal may be so fine that

it is impossible to work with in practice.

53. And, really, just what is that arbitrator to do? Having taken

especial care to understand the nuances of the appointing party’s

case and having worked hard to ensure that it is properly understood

by the other arbitrators, do we really expect that at that point, the

arbitrator will mentally shift gears and reject the validity of the case

that he has just presented to his colleagues on the tribunal in the most

comprehensible way possible? In truth, in this process, there is a

danger of actual bias when the party-appointed arbitrator

unconsciously slips into the territory of self-persuasion; and even

greater is the danger of apparent bias where such an arbitrator could

be seen as being less than impartial by virtue of his role as a quasi-

advocate.68 I say quasi-advocate because in essence, it is being

29

suggested that the party-appointed arbitrator’s duty is to be the

presenter of his appointer’s case to the tribunal in the privacy of the

deliberation room and to see to it that that case is understood. In truth,

the fact that much of this will be played out in the privacy of the arbitral

caucus, and therefore outside the knowledge of the parties who might

not even be aware of what precisely is taking place, actually has the

potential to exacerbate the problem of bias, both actual and apparent.

54. Thus, I prefer a bright line rule. All arbitrators once appointed,

irrespective of how they are appointed or by whom, should owe no

affinity, partiality or special duty to either side. They have one role,

and that is to judge and this should be done fairly with due regard to

the interests of both parties. Of course, this does not mean that

arbitrators are blank slates. As has regularly been pointed out in the

context of administrative law, “an open mind is not an empty one”.69

Arbitrators are chosen because of the rich tapestry of skills and

experiences that they bring to bear, and for their sensitivity to the

peculiarities of the dispute in each particular case. This comes in

many forms, including legal expertise, industry experience, or shared

cultural experiences. Party-appointed arbitrators are no different.

They are chosen chiefly because they present a particular matrix of

skills and experiences which can usefully inform the tribunal’s

discussions. There is nothing wrong with this, and if these skills and

30

experiences are applied in a truly fair manner, they may just as well

work against the appointing party as in his favour. But the critical point

is that the arbitrator cannot have a special role to play in relation to

one party’s case just because he was appointed by that party.

VI. Clear and practical rules of engagement

55. I turn now to the practical guidelines which could help parties

approach appointments from level ground. As it stands, many arbitral

institutions have already published extensive codes of ethics to

regulate and guide the conduct of arbitrators involved in arbitrations

under their purview. These codes emphasise the importance of

independence and neutrality, and they do not distinguish between

party-appointed arbitrators and those who are neutrally appointed.

This is a good start, but I propose three further steps that may be

taken.

A. The appointment process

56. First, I support the publication of clear guidelines on what

constitutes acceptable conduct in the appointment process,

particularly in the course of what is now becoming the widespread

practice of pre-appointment interviews. The pre-appointment

interview is an area fraught with difficulty because of the sheer

31

number of parameters that may influence its propriety, or give rise to

an appearance of impropriety. The temptation for misdemeanour can

be irresistible because of the privacy of the interview; and I dare say

it would be naïve to deny the real danger that potential appointees

might be swayed to hold out, if not adopt, a position favourable to the

appointing party through the interview process. To put it bluntly: the

arbitrator is being interviewed for an appointment, which it is in his

professional interest to try to secure.

57. The International Bar Association (“IBA”) Rules of Ethics for

International Arbitrators 1987 specify that potential arbitrators may

entertain queries from the parties “designed to determine his

suitability … provided the merits of the case are not discussed”. They

also specify that no hospitality should be received.70 Similarly, CIArb

has issued a practice guideline which sets out a list of permissible

topics for discussion and a list of matters which are off-limits, such as

the merits of the case. The guideline also specifies that the arbitrator

should be allowed to decline to answer any question without adverse

repercussions.71 However, this begs the question as to whose

perspective one adopts when assessing adverse repercussions,

because a refusal to answer may, not infrequently, lead to the

interviewee being ruled out as a candidate for the appointment. Some

prospective appointees might see that as a rather adverse

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repercussion! Various other practical matters are also suggested by

the guideline such as where the interview should be conducted,72 who

should be present and conducting the interview,73 and how a record

should be kept.74

58. I agree with these suggestions and I would add two more. One,

as a matter of prudence, the interviews should be kept short. In one

case, the ICC Court refused to confirm an arbitrator who spent 50–60

hours with the nominating party before appointment.75 If one is

sincere about the purpose of the interview, the interaction seldom, if

ever, needs to extend beyond an hour or two.

59. Two, and I appreciate that this might appear to be radical, I

would propose that all pre-appointment interviews and

communications be recorded, and that the transcripts be made

available to the other party as soon as is reasonably practicable. I

think this is necessary if we are to take seriously the task of throwing

light on the pre-appointment process, with a view to disinfecting it.

60. In a piece Mark Friedman wrote in response to the CIArb

practice guideline, he said that, because of the innumerable

permutations in which a pre-appointment interview could be

conducted, “the overriding control is not guidelines”, but ultimately lies

in “judgment about when a conversation strays into unacceptable

33

territory”.76 Despite this, Friedman remains opposed to the idea of

recording pre-appointment interviews. He argues that many

practitioners “would abhor taping interviews as being intrusive,

demeaning and perhaps even likely to provoke more litigation as

disgruntled parties pore over every word in search of phrases they

might pluck out to support a challenge”.77

61. However, no explanation is given for that abhorrence and I, for

one, cannot think of any reason—apart from the unexplained allusion

to the lawyer’s discomfort—why recordings should not be taken.

Everything we say in court or in arbitration is generally recorded and

transcribed. This is a central feature of open justice. Is it suggested

that these discussions with a potential appointee have a quality of

privacy or confidentiality that the other party to the arbitration is to be

excluded from them? If so, on what basis? The concern of this

spawning litigation is also unsubstantiated. After all, if nothing

improper had in fact taken place, then there is nothing that needs to

be hidden.

62. The important point is this: arbitration is an adjudicative

process and because it is so, we need to not only ensure that justice

is done, but also that it is seen to be done, so that the confidence of

parties and of the broader society is preserved. Leaving aside faith, it

34

seems to me that the only way that one could reasonably satisfy the

other party that the judgment of the prospective appointee as to what

may properly be discussed during the interview was in fact properly

exercised, and that the conversation did not stray into unacceptable

territory, is by producing a record of the interview. I also suggest that

a widespread and uniform practice of recording and disclosing pre-

appointment interviews would have the salutary effect of discouraging

interviewers from asking improper questions as well as protecting

inexperienced and perhaps overly enthusiastic arbitrators from

feeling pressured to posture to please their potential paymasters. I

am bound to say that I do not think this is a fanciful concern.

B. Unilateral communications

63. Second, I support the institution of a clear rule against

unilateral communications following appointment. This prohibition is

reflected in the rules of most arbitral institutions and the rationale

behind it is self-evident and illustrated starkly by the recent

controversy over the Croatia-Slovenia arbitration.

64. However, some institutions in their rules make an exception

where the communications concern the selection of the presiding

arbitrator. Prominent examples include the International Institute for

Conflict Prevention and Resolution, the IBA, and the London Court of

35

International Arbitration.78 It is also said by some commentators to be

“established and accepted practice”.79 Proponents of the exception

argue that the parties are in a better position, by virtue of their greater

resources and better understanding of the case, to look up the

background and decide on the suitability of prospective appointees.80

As against this, there are other institutions such as the World

Intellectual Property Organisation and the AAA, whose rules forbid all

forms of unilateral communications save for pre-appointment

communications.81

65. For my part, I would align myself with the institutions which

have taken a bright line rule against all post-appointment ex parte

communications, whether or not it relates to the appointment of the

presiding arbitrator. I am aware that this suggestion might cut against

the grain of prevailing practice,82 but my view is that creating any

exceptions to the rule against unilateral communications after

appointment is dangerous and should not be countenanced. The

difficulty with permitting ex parte communications even in what might

seem to be a relatively narrow area is that these communications,

which pertain to the choice of a presiding arbitrator, can extend to

strategic considerations influenced by a party’s own view of the merits

or prospects of its case. It seems to me to be wholly unsatisfactory

36

that such matters should be the subject of private ex parte

communication between a party and its appointee on the tribunal.

66. If the intention is to preserve at least some measure of party

involvement in the selection of the presiding arbitrator, this can be

achieved through a variety of other mechanisms. Parties may draw

up mutually agreed lists of suitable candidates; or they could

exchange separate lists of potential appointees with their preferences

ranked ordinally. None of this requires ex parte communications

between a party and its appointed arbitrator.

C. Conflicts of interest

67. My third point concerns guidelines for managing conflicts of

interest. The issue takes special importance in the context of party-

appointed arbitrators because the appointee may often be selected

on the basis of dealings the appointer has had with the appointee.

This raises the murky spectre of multiple repeat appointments of the

same arbitrator by a particular party or counsel. Party appointees

should therefore be very mindful of the potential risk of a conflict.

68. Historically, jurisdictions sought to define the list of

circumstances in which an arbitrator could be removed on the ground

of a conflict of interest. These mirrored the circumstances which might

37

trigger a recusal for judges: for example, where the adjudicator has a

direct pecuniary interest in the case or is related to one of the parties.

This practice, was, however, quickly abandoned given the

innumerable factual scenarios which might justifiably give rise to

concerns over a lack of independence or impartiality.83 In recent

years, arbitral institutions and think tanks have attempted to revive

this project by publishing guidelines on situations that might

necessitate either disclosure or recusal, depending on the nature of

the link or connection in question.

69. The most prominent example is the IBA’s Guidelines on

Conflicts of Interest. These guidelines were first published in 2004

and revised in 2014.84 In broad terms, it sets out a tiered and

categorised system of disclosure, where different types of “flags”

might be raised depending on which category the connection in

question falls into.85 This is also, in broad terms, the position taken by

the ICC, which recently issued a guidance note to parties and arbitral

tribunals setting out a non-exhaustive list of situations in which the

independence or impartiality of arbitrators may be called into question

and which may trigger an obligation of disclosure.86

70. In principle, I support the promulgation of guidelines, which

provide a helpful reference point for practitioners who require working

38

examples of what is and is not acceptable conduct. They also serve

as a good working tool for arbitrators and parties seeking to police

themselves. Guidelines, however, become dangerous when they are

treated not as illustrative, but as prescriptive. In the final analysis, the

existence of a matter implying a need for disclosure does not

necessarily imply the existence of a conflict of interest, much less an

absence of neutrality. Whether there are justifiable grounds for

suspecting a lack of impartiality or independence is ultimately, as the

English High Court reiterated recently, a matter that is “classically

appropriate for a case-specific judgment”.87 This is a powerful insight.

Thus, what the prospective appointee must do in each case is to

consider the facts fairly and exercise his judgment thoughtfully using

the counsel of such materials as the IBA Guidelines and the ICC

Guidance Note.

VII. A systematic approach to arbitrator regulation

71. In the last part of my lecture, I consider the issue of arbitrator

conduct from a different perspective. The first three points I have

touched on are preventive in nature and provide guidance for parties

and prospective arbitrators. My final suggestion, however, proposes

the establishment of a central body to oversee the discipline of

international arbitrators. The broad idea has been canvassed for

39

some time now.88 More recently, CIArb has given this serious thought.

Some of my colleagues at CIArb and I are developing a proposal for

CIArb to offer to other arbitral institutions an outsourced disciplinary

adjudication process in respect of complaints against arbitrators in

general, not just party-appointed ones. I see this as an instance of

self-regulation by the arbitration profession and I see it as a measure

that will ultimately strengthen arbitration as a whole even while it

improves outcomes in individual cases.

72. I should caution that this is a work-in-progress, but we are in

the process of drafting a set of rules that will allow instances of

arbitrator misconduct to be referred to and resolved by CIArb as a

completely independent institution. We envisage this operating

primarily in the context of arbitrations administered by institutions.

Where a complaint arises in a given case, we envisage that the rules

will establish a tiered system under which the complaint will first be

raised to the arbitral institution administering the arbitration. If

justifiable cause for complaint is found on a preliminary inquiry by the

institution, the matter will then be referred to CIArb, which will

consider the matter further. CIArb may take no further action, or it may

administer disciplinary proceedings presided over by arbitrators

selected from a list of qualified practitioners maintained by CIArb.

40

73. A finding of misconduct could result in sanctions which can

include, for example, the removal of the transgressing arbitrator from

the arbitral institution’s list of approved arbitrators or expulsion from

CIArb. On the other hand, dismissal of the claim should put an end to

any subsequent due process challenge arising out of these facts

being made against the award that is eventually issued. This will likely

be the case as long as the process is written into the rules of the

arbitral institutions in question and are matters that the parties have

agreed to abide by when they arbitrate under the auspices of the

institution in question. As a general rule, the findings of any

disciplinary proceedings conducted by CIArb will be published and

notified to other arbitral institutions enrolled in the scheme.

74. This scheme will have several advantages. I begin by

suggesting that CIArb is an ideal body to offer this service and to

conduct and administer such proceedings, principally for four

reasons:

(a) First, CIArb enjoys the great benefit of neutrality as it is

not itself involved in administering arbitrations—it is and will be

wholly independent. This will overcome one complaint that is

sometimes raised, which is that the arbitral institutions may find

it difficult to effectively discipline their own.

41

(b) Second, CIArb is a truly global arbitration body with a

long reach in membership across numerous jurisdictions. This

will ensure sensitivity to a wide arc of practice and also ensure

that qualified persons to run the scheme can be drawn from the

world over, thus enhancing its legitimacy.

(c) Third, CIArb is an institution steeped in arbitral learning

and training, and it has devoted considerable attention to the

development of best practices. This will help ensure that the

scheme remains at the cutting edge as an effective means of

advancing the rule of law in arbitration.

(d) Fourth, the proposed scheme will build on the existing

independent disciplinary system of CIArb which already enjoys

worldwide credibility.

75. Beyond this, and looking ahead, I envisage that the scheme

will put in place a robust and independent disciplinary process to

investigate instances of arbitrator misconduct. This will enhance the

legitimacy of arbitration. Moreover, we intend to publish the decisions

of the disciplinary tribunals, and I expect this will contribute over time

to the development of a corpus of law on the standards of conduct of

arbitrators which can then educate and guide practitioners from any

jurisdiction. I said earlier that I see this as an example of self-

42

regulation. The idea is that issues of arbitrator conduct will, under this

proposal, be dealt with by arbitrators under the auspices of CIArb

rather than by many different courts and it should enhance the

legitimacy of arbitration as a whole, if many of the leading institutions

were to come on board. We hope to take this proposal to the major

institutions in the course of the next year or two and look forward to

their receiving it warmly.

VIII. Conclusion

76. I will conclude by leaving you with this thought. I have been

speaking on the need for steps like these to be taken if we are to

preserve the confidence of users in the arbitration process. But they

are also needed for another equally important reason: training and

schooling new lawyers and entrants into the field of arbitration on the

acceptable standards of conduct and behaviour that are to be

expected of practitioners; for it is these young practitioners who are

the foundations on which the future of arbitration will rest.

77. The path that our young colleagues will follow into a career in

international arbitration will differ significantly from the one that I, and

many among those of my generation, followed. Most of us learnt our

craft in court where there was much less scope for rules, procedures

and expectations to be misunderstood. And when we ventured into

43

arbitration, we mostly interacted with others who had a similar

formation. The young today are no longer bound by the shackles of

the past. They can and do step into the practice of global arbitration

from the start, but they do so in an environment that features a wide

penumbra of what constitutes acceptable practice and conduct. As

we think again of the institutional design of arbitration to suit the needs

of a dynamic and burgeoning market, we should strive to do what we

can to provide a measure of clarity in terms of what is and is not

acceptable so that in the process, we might lessen the chance of

things going awry.

78. Thank you very much.

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1 Arbitration Agreement between the Government of the Republic of Slovenia and the Government of the Republic of Croatia (25 May 2011) 2748 UNTS 3 (entered into force 29 November 2010). 2 Permanent Court of Arbitration, Press Release dated 13 April 2012: <https://www.pcacases.com/web/sendAttach/238> (accessed 22 August 2016). 3 Permanent Court of Arbitration, Press Release dated 10 July 2015: <www.pcacases.com/web/sendAttach/1308> (accessed 22 August 2016). 4 I relied heavily on an excellent article on the subject published by Arman Sarvarian & Rudy Baker, “Arbitration between Croatia and Slovenia: Leaks, Wiretaps, Scandal”, posted on the blog of the European Journal of International Law: <http://www.ejiltalk.org/arbitration-between-croatia-and-slovenia-leaks-wiretaps-scandal/> (accessed 22 August 2016). 5 Permanent Court of Arbitration, Press Release dated 30 June 2016: <https://pcacases.com/web/sendAttach/1785> (accessed 22 November 2016); the partial award may be found at: <https://pcacases.com/web/sendAttach/1787> (accessed 22 November 2016). 6 Croatian Ministry of Foreign and European Affairs, Press Release dated 30 June 2016: <http://www.mvep.hr/en/info-servis/press-releases/press-release-on-arbitral-tribunal%E2%80%99s-decision-,25852.html> (accessed 22 August 2016). 7 This arbitration arose out of a border dispute between the US and Canada on where the boundary between Alaska and Canada should be drawn. Theodore Roosevelt wrote to the American appointees to the Tribunal putting pressure on them to take the US government’s position in the award: see Jan Paulsson, “Moral Hazard in International Dispute Resolution” 25(2) ICSID Review 339 (“Paulsson”). 8 The dispute concerned ownership of a forlorn oasis on the border of Saudi Arabia and modern day Oman. Saudi Arabia appointed Sheikh Yusuf Yasin, its deputy foreign minister, as its nominee. The arbitration collapsed into confusion and acrimony after the British complained about Sheikh Yusuf’s incessant interference with the tribunal and his constant communications with the Saudi government: see Rudolf Bernhardt, Decisions of International Courts and Tribunals and International Arbitrations (Elsevier, 2014) at p 41. 9 Some Iranian arbitrators appointed to the Tribunal were apparently from the legal office that handled the Iranian government’s claims before the Tribunal: see Richard M Mosk, “The Role of Party-Appointed Arbitrators in International Arbitration: The Experience of the Iran-United States Claims Tribunal” 1 Transnational Law 253 (“Mosk”) at p 269. 10 Loewen Group, Inc and Raymond L Loewen v United States of America, ICSID Case No ARB(AF)98/3, Award (26 June 2003). This was an arbitration between a Canadian company and the US government under the North American Free Trade Agreement (“NAFTA”). The US-appointed arbitrator met with US Department of Justice officials prior to his appointment, and he was told that if the US government lost the case, they “could lose NAFTA”. One scholar commented that the tribunal ruled in favour of the US government on “a highly abstruse point … which the three arbitrators, most specialists agree, got quite wrong”: Paulsson at p 345. 11 Hans Smit, “The Pernicious Institution of the Party-Appointed Arbitrator”, Columbia FDI Perspectives No 33 (14 December 2010). 12 Paulsson at pp 357 and 362. 13 Albert Jan van den Berg, “Dissenting Opinions by Party-Appointed Arbitrators in Investment Arbitration” in Looking to the Future: Essays on International Law in Honor of W Michael Reisman (Mahnoush Arsanjani et al, eds) (Brill Academic, 2011) at pp 824–825.

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14 See the examples cited in Alfonso Gomez-Acebo, Party-Appointed Arbitrators in International Commercial Arbitration (Kluwer Law International, 2016) (“Gomez-Acebo”) at para 2-5. Demosthenes, writing in the 4th century BC, describes a private dispute between two parties which was submitted for resolution in terms that we would not be unfamiliar with. The parties each appointed one person to sit on the tribunal and, together, selected one common arbitrator. They agreed that if this tribunal of three could not come to a consensus, a decision would be taken by majority vote. This is taken from a speech entitled “Against Aparurius” contained in Demosthenes, Orations, Volume IV: Orations 27–40: Private Cases (Translated by A T Murray) (Harvard University Press, 1936) at p 211:

[T]hey proceeded to an arbitration, and after drawing up an agreement they submitted the matter to one common arbitrator, Phocritus, a fellow-countryman of theirs; and each appointed one man to sit with Phocritus, Apaturius choosing Aristocles of Oea, and Parmeno choosing me. They agreed in the articles that, if we three were of one mind, our decision should be binding on them, but, if not, then they should be bound to abide by what the two should determine.

15 See, eg, “Against Archebiades” in Lysias; “On the Estate of Dicaeogenes” in Isaeus. 16 Derek Roebuck, Ancient Greek Arbitration (The Arbitration Press, 2011) (“Roebuck”) at p 164. 17 Roebuck at p 351. 18 John Bassett Moore, History and Digest of International Arbitrations vol 5 (Government Printing Office, 1898) at p 4832. 19 Tom Bingham, “The Alabama Claims Arbitration”, 52 International & Comparative Law Quarterly 1 at pp 9–10. 20 Roy Jenkins, Gladstone (Macmillan, 1995) at p 356–357. 21 Not the least of which was that it purported to lay down, in Article VI, three rules of substantive law relating to the obligations of neutral states in times of law which would apply retrospectively, in the sense that the Tribunal was to evaluate Great Britain’s conduct by reference to these principles. This was clearly a product of compromise, rather than legal principle. 22 V V Veeder, “The Historical Keystone to International Arbitration: The Party-Appointed Arbitrator — From Miami to Geneva” 107 Proceedings of the American Society of International Law 387 (“Veeder”) at pp 392–393. 23 Veeder at pp 392–393. 24 Shabtai Roseanne, The World Court: What it is and how it works (Martin Nijhoff Dordrecht, 1995) at pp 5–6. 25 1899 Hague Convention, Art 24. 26 Statute of the Permanent Court of International Justice, Art 31; Statute of the International Court of Justice, Art 31. 27 International Chamber of Commerce, “Arbitration – Revision of the Rules of Conciliation and Arbitration” ICC Brochure No 50 at pp 4 and 11. 28 Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, Art 37(2)(b). 29 UNCITRAL Model Law (2006), Art 11(3). 30 UNCITRAL Arbitration Rules (2010), Art 33(1). 31 ICC Rules of Arbitration (2012), Art 12(2). 32 France, the UK, Canada, India, Hong Kong, Singapore. 33 Veeder at p 391. 34 Joseph M Mathews, “Difficult Transitions Do Not Always Require Major Adjustment – It’s Not Time to Abandon Party-Nominated Arbitrators in Investment Arbitration” 25(2) ICSID Review 356 at pp 357 and 362. 35 Charles Francis Adams, the appointee of the United States, was the grandson the nation’s first President and the son of its fourth, and had spent a great deal of time in London where he held office as America’s chief diplomatic representative. Alexander

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Cockburn, the appointee of Great Britain, was the Lord Chief Justice of England and Wales. 36 Doak Bishop & Margrete Stevens, “The Compelling Need for a Code of Ethics in International Arbitration: Transparency, Integrity and Legitimacy” at p 5: <http://www.josemigueljudice-arbitration.com/xms/files/02_TEXTOS_ARBITRAGEM/01_Doutrina_ScolarsTexts/ethics/ethics_in_int_arb_-_icca_2010_-_bishop.pdf> (accessed 22 August 2016). 37 Gary Born & Thomas R Snider, “A Code of Conduct for Counsel in International Arbitration”, Kluwer Arbitration Blog (16 November 2010): <http://kluwerarbitrationblog.com/2010/11/16/a-code-of-conduct-for-counsel-in-international-arbitration/> (accessed 22 August 2016). 38 Catherine A Rogers, “Fit and Function in Legal Ethics: Developing a Code of Conduct for International Arbitration” 23 Michigan Journal of International Law 341 at p 344. 39 Niklas Elofsson, “Ex Parte Interview of Party-Appointed Arbitrator Candidates: A study Based on the Views of Counsel and Arbitrators in Sweden and the United States” 30 Journal of International Arbitration 230. 40 Yves Dezelay & Bryant G Garth, Dealing in Virtue: International Commercial Arbitration and the Construction of a Transnational Legal Order (University of Chicago Press, 1998). 41 Dimes v Grand Junction Canal (1852) 3 HL Cas 759. 42 Cofely Limited v Anthony Bingham and another [2016] EWHC 260 (Comm). 43 Cofely Limited v Anthony Bingham and another [2016] EWHC 260 (Comm) at [108]. 44 Gus van Harten, Investment Treaty Arbitration and Public Law (Oxford University Press, 2007) at pp 126–128. 45 In inter-State arbitration this is often expressed as the difference between a “diplomatic” and “judicial” model of arbitration: see Steven Schwebel, International Arbitration: Three Salient Problems (Grotius Publications, 1987) at pp 144–154. In the case of international commercial arbitration, the difference is between a “contractual” and “judicial model”. An early champion of the judicial view was Judge Pound: see American Eagle Fire Insurance Co v New Jersey Insurance Co (1925) 240 NY 398 at 405. 46 Steven Szlilard v Ralph Szasz [1954] 1 SCR 3 at 4, per Rand J. 47 See the examples cited in footnotes 5–7 of Chapter 4 of Gomez-Acebo. The UNCITRAL Rules, for example, affords parties a right to challenge an arbitrator if “circumstances exist that give rise to justifiable doubts as to the arbitrator’s impartiality or independence: see UNCITRAL Arbitration Rules (2013), Art 12(1). See also London Court of International Arbitration Rules (2014), Art 5.3. Other sets of rules use different expressions, but the purport and effect is the same. 48 ABA Code of Ethics for Arbitrators in Commercial Disputes (1977), Canon VII(A)(1). Some have suggested that this was precipitated by the general shift in American jurisprudence that jettisoned the “judicial” view of arbitration in favour of a “contract” view espoused by the New York Court of Appeals in In re Astoria Medical Group and Health Ins Plan of Greater new York 11 NY2d 128 (1962) at 135: see Mosk at 259. 49 ABA Code of Ethics (1977), Canon VII(C)(2). 50 ABA Code of Ethics (2004), Canon X(C). 51 Paulsson at pp 357 and 362. 52 Andreas F Lowenfeld, “The Party-Appointed Arbitrator in International Controversies: Some Reflections”, 30 Texas International Law Journal 59 (“Lowenfeld”) at p 65. 53 Yuval Shany, “Squaring the Circle? Independence and Impartiality of Party-Appointed Adjudicators in International Legal Proceedings” 30 Loyola of Los Angeles International and Comparative Law Review 473 at p 474; David J McLean & Sean-

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Patrick Wilson, “Is Three A Crowd? Neutrality, Partiality and Partisanship in the Context of Tripartite Arbitrations” 9(1) Pepperdine Dispute Resolution Law Journal 167 at pp 168–169; Veeder at p 402. 54 Yves Derains, “The Deliberations of the Arbitral Tribunal—Retour au délibéré arbitral”, in The Resolution of the Dispute—From the Hearing to the Award (Markus Wirth, ed) (ASA Special Series, 2007) at p 16. 55 Daphna Kapeliuk, “The Repeat Appointment Factor: Exploring Decision Patterns of Elite Investment Arbitrators” 96 Cornell Law Review 47, in which the author concludes after a statistical analysis of Investment Treaty arbitration decisions that (at p 90):

[T]the arbitrators’ valuable professional reputation could be a key incentive for them to remain impartial. Impartiality critically affects not only their future selection as arbitrators but also other spheres of their professional careers, whether as private counsel or as academics. In order to promote their reputation, arbutrators may choose to increase accuracy and to counter any real or perceived biases rather than to cater to any particular interests. This tendency rings especially true for repeat arbitrators in the arbitration market, whose most valuable trait may be their reputation as credible and independent decision makers.

56 Alexis Mourre, “Are unilateral appointments defensible? On Jan Paulsson’s Moral Hazard in International Arbitration”, Kluwer Arbitration Blog (5 October 2010): <http://kluwerarbitrationblog.com/2010/10/05/are-unilateral-appointments-defensible-on-jan-paulssons-moral-hazard-in-international-arbitration/> (accessed 22 August 2016). 57 2010 International Arbitration Survey: Choices in International Arbitration at p 26: <http://www.arbitration.qmul.ac.uk/docs/123290.pdf> (accessed 3 July 2016). 58 See J Scott, The Proceedings of the Hague Peace Conference, Translation of the Official Texts, II The Conference of 1907, Meetings of the First Commission 2 (Leon Bourgeois, 1921), quoted in Gary Born, International Commercial Arbitration (Wolters Kluwer, 2nd Ed, 2014) (“Born”) at p 1639. 59 Charles N Brower & Charles B Rosenberg, “The Death of the Two-Headed Nightingale: Why the Paulsson–van den Berg Presumption that Party-Appointed Arbitrators are Untrustworthy is Wrongheaded” 29(1) Arbitration International 7. 60 Charles N Brower, Michael Pulos & Charles B Rosenberg, “So Is There Anything Really Wrong With International Arbitration as We Know It?” at p 7: <https://international-arbitration-attorney.com/wp-content/uploads/arbitrationCharles_Brower_So_Is_There_Anything_Really_Wrong_with_International_Arbitration_A.pdf> (accessed 22 August 2016). 61 See Born at p 1639. 62 Nigel Blackaby & Constantine Partasides, Redfern and Hunter on International Arbitration (Oxford University Press, 6th Ed, 2015) at para 4.30. 63 Doak Bishop & Lucy Reed, “Practical Guidelines for Interviewing, Selecting and Challenging Party-Appointed Arbitrators in International Commercial Arbitration” 14(4) Arbitration International 395 (“Bishop & Reed”) at p 405. 64 A A de Fina, “The party appointed arbitrator in international arbitration – Role and Selection” 15(4) Arbitration International 381 (“de Fina”) at p 382. 65 Jacques Werner, “Editorial – The Independence of Party-Appointed Arbitrators: For a Rule of Reason” 7(2) Journal of International Arbitration 5 at p 5. 66 Catherine A Rogers, Ethics in International Arbitration (Oxford University Press, 2014) at paras 8.57–8.76. 67 Lowenfeld at p 65. 68 Gomez-Acebo at pp104–105. 69 Barbosa v Di Meglio [1999] NSWCA 307 at [9], per Mason P. 70 IBA Rules on Ethics for International Arbitrators (1987), rr 5.1 and 5.5.

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71 CIArb, Practice Guideline 16: The Interviewing of Prospective Arbitrators (“Practice Guideline 16”) at 3.1(10) and 3.1(11). 72 Practice Guideline 16 at 3.1(15). 73 Practice Guideline 16 at 3.1(6). 74 Practice Guideline 16 at 3.1(7). 75 Dominique Hascher, “ICC Practice in Relation to the Appointment, Confirmation, Challenge and Replacement of Arbitrators” 11 ICC Arbitration Bulletin 4 (November 1995); see also Practice Guideline 16 at 3.1(16), which suggests that there should be an agreed time limit imposed on interviews. 76 Mark W Friedman, “Regulating Judgment: A Comment on the Chartered Institute of Arbitrators’ Guidelines on the Interviewing of Prospective Arbitrators” (2008) 2 Dispute Resolution International 288 (“Friedman”) at p 292. 77 Friedman at p 289. 78 CPR Rules on Non-Administered Arbitrations, Art 7.4; IBA Rules on Ethics for International Arbitrators (1987), r 5.2; LCIA Arbitration Rules (2014), Art 13.5. 79 See for example, de Fina at p 383. 80 Bishop & Reed; Born at p 1699. 81 AAA International Arbitration Rules, Art 13.6; WIPO Arbitration Rules, Art 21. 82 Born at pp 1697–1698. 83 Gomez-Acebo at para 4-36. 84 IBA Guidelines on Conflicts of Interest in International Arbitration (2014), Part II. 85 At the top is the “Non-Waivable Red List”, which triggers mandatory recusal, with no exception. Going down a tier, there is the “Waivable Red List”, which concerns matters which would give rise to significant doubts as to the arbitrator’s independence and impartiality but can be cured with the informed consent of both parties. Third is the “orange list”, which pertains to matters which trigger mandatory disclosure, but may or may not give rise to concerns over fitness to serve. At the very bottom is the “green list”, where there is no disqualifying conflict of interest and therefore no requirement of disclosure. 86 International Chamber of Commerce, “Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration under the ICC Rules of Arbitration” (13 July 2016) at paras 17–22: <http://www.iccwbo.org/WorkArea/DownloadAsset.aspx?id=19327366894> (accessed 22 August 2016). 87 W Ltd v M Sdn Bhd [2016] EWHC (Comm). The sole arbitrator in that case was a partner of a law firm which regularly advised an affiliate of the defendant, which in turn earned significant remuneration for that work. On this basis, the claimant sought to challenge the award on the ground of apparent bias. It was common ground that the arbitrator himself had never done any work for the defendant had, for the last 10 years, operated effectively as a sole practitioner who did not concern himself with the affairs of the partnership. Ordinarily, that would be the end of the matter. However, para 1.4 IBA Guidelines includes as a condition to be disclosed circumstances in which “[t]he arbitrator or his or her firm regularly advises the party, or an affiliate of the party, and the arbitrator or his or her firm derives significant income therefrom.” What was worse, para 1.4 fell within the “Non-waivable red list”, which pertains to matters which trigger automatic recusal. Counsel for the defendants submitted that the IBA guidelines were “pretty emphatic”, a “very powerful factor”, and even that a real possibility of bias had arisen “because that is what we are told through Paragraph 1.4”. Mr Justice Knowles unhesitatingly gave short shrift to this argument. 88 Last year, for example, the Swiss Arbitration Association proposed creating a transnational body known as the Global Arbitration Ethics Council, which will deal with all sanctions relating to purely ethical issues. See Anne-Carole Cremades, “The Creation of a Global Arbitration Ethics Council: a Truly Global Solution to a Global

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Problem”, Kluwer Arbitration Blog: <http://kluwerarbitrationblog.com/2015/11/24/the-creation-of-a-global-arbitration-ethics-council-a-truly-global-solution-to-a-global-problem/> (accessed 22 November 2016).